Dodging Disclosure: How Super PACs Used Reporting Loopholes and Digital Disclaimer Gaps to Keep Voters in the Dark in the 2018 Midterms

The 2018 elections were the most expensive midterms in American history. All told, at least $8.9 billion was spent on advertising, according to preliminary estimates from Borrell Associates.

In many ways, the 2018 midterms continued the big money trends that have accelerated over the last decade, as the U.S. Supreme Court has struck down limits on money in politics and the Federal Election Commission (“FEC”) has failed to enforce those laws that remain. Hundreds of millions of dollars were spent by super PACs and dark money groups, and a handful of megadonors provided most of their funding.

At the same time, as the report details, some new big money trends and tactics emerged in the 2018 cycle.

For the first time, nationally focused, party-aligned super PACs surpassed party congressional committees as the top spenders on independent expenditures - and through a variety of dubious tactics, those super PACs sought to pass off significant chunks of that spending as locally sourced and experimented with various ploys to hide their donors.

One practice that intensified in the 2018 elections was the pre-election reporting dodge. In several races, mysterious super PACs popped up in the weeks before Election Day, spent five, six, or seven figures on ads, and combined legally dubious accounting tricks with reporting calendar loopholes to keep voters in the dark about the sources of their funding until well after voters cast their ballots. In many cases, these reporting dodges were designed to hide the role of national super PACs.

For example, in West Virginia’s Republican U.S. Senate primary, the “Mountain Families PAC” spent $1.3 million, but manipulated FEC reporting schedules to avoid disclosing until after the election that it was mostly bankrolled by the McConnell-tied SLF, and that none of its funding came from West Virginia. The “Duty and Country PAC” also spent around $1.8 million in the Republican primary, and only after the election did it file reports disclosing that it was funded by a handful of major Democratic donors.

In the Alabama special election in December 2017, a super PAC called “Highway 31” - named after the major route crossing the state -reported spending $4.1 million in the final weeks before the election. But because it claimed that all of its spending was on credit, Alabama voters did not learn until a month after Election Day that Highway 31’s top funders were two national Democratic super PACs, SMP and Priorities USA Action.

The report identifies more than two dozen super PACs that together spent over $8.1 million in primary elections around the country, but did not disclose the sources of those funds until after the elections had passed. Then, in the final weeks of the general election, over $29.3 million was spent by 17 super PACs that were newly created and had reported no contributors, or whose spending exceeded their last-reported cash-on-hand by 500 percent.

Meanwhile, new transparency measures instituted by platforms like Facebook revealed that national super PACs like these were carrying out analogous ventriloquist efforts online.

For example, throughout 2018, the Facebook page “Hoosier Country” ran paid advertisements attacking Indiana’s Republican U.S. Senate candidate, Mike Braun. Only after Facebook instituted new requirements that political ads must include disclaimers stating who paid for them was it revealed that Hoosier Country’s ads were actually paid for by SMP and another top-spending Democratic super PAC, Priorities USA Action.

SMP and Priorities USA Action were behind similar Facebook pages in Missouri, Florida, and Maine that ran ads backing Democratic candidates. Absent these disclaimers and Facebook’s new political ad archive, the press and public would have had no idea that national Democratic super PACs were behind these apparently homegrown Facebook pages.

However, the 2018 midterms also demonstrated self-regulation’s limits. Candidates, parties, and PACs are legally required to include disclaimers on digital ads, but dark money groups are not subject to those requirements, unless their online ads expressly advocate for or against candidates. Reporters at the New York Timesand Vicefound that Facebook ads can easily be run under names like “Mike Pence” or a “freedom loving American Citizen exercising my natural law right,” because it turns out that Facebook allows advertisers simply to fill in the disclaimer field with whatever text they choose.

Because disclaimers are not yet legally required for many digital ads, it is difficult to prevent groups from taking advantage of loopholes like these. Moreover, voluntary transparency measures adopted by platforms like Facebook or Twitter can change at any time - and do not affect any of the other platforms that host political ads.

In the meantime, as political ad spending continued migrating online these digital transparency gaps will only grow wider.

The 2018 election results demonstrated that Americans want a democracy that is transparent and elected officials who are accountable to voters rather than donors. Hundreds of candidates ran against the influence of money in politics and pledged to support reform; hundreds more took the symbolic step of rejecting money from corporate PACs. Voters backed ballot initiatives in cities and states across the country that would create or strengthen anti-corruption measures.

The report concludes by outlining a number of easy legislative and regulatory fixes to these troubling trends, including Congress passing the Honest Ads Act and requiring super PACs to report last-minute contributions, and the FEC writing new rules to update disclaimer requirements for the digital age. Congress and the FEC have the power to address the problems that emerged this cycle, and a mandate to do so.